Only A Potential Start

Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"... a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts or call 888.484.8220 ext. 1.

The concerted effort to goose the market back up and instill some confidence has worked over the past few days. What do I mean by concerted? Simple...did you hear what both Citi and BAC said? Yup...the exact same thing. "For the first two months of the year"... they are profitable. It seems to me our good government took both Pandit and Lewis on the side...told them that they will be removing their bad assets...thus they can now go out and talk about how good things are. Think about it. CITI was just given $40 billion...had their bad loans backed to the tune of $300 billion...but hey, business is great. Of course, we should now believe these people who have, to be nice, misled the public for eons. For me, all they are saying is that when a bank can take in money at 0% and lend out at 6%, it is easy to make money. Such genius.

Since my last report, the DOW dropped 600 points and has now rallied 700 points off that low...all in 9 days. The most important outcome was another follow through day on Thursday. I believe there have been 8 follow through days which have NOT led to good gains during this most brutal of bear markets. But we must not shrug off the next one as the most important characteristic that shows up in front of a new bull move is the follow through day. Just keep in mind that while every bull move in history has had one, not every follow through day has led to a new bull move.

I believe this one has a better chance of working but as usual, I will tell you...time will tell. Let the market be your guide. We now want to see a plethora of leading stocks break out out of sound bases...with more and more names showing up in the weeks ahead. So far, there is a small list because of how bad the market has been. Names I am watching and may start to probe are Netflix, Autozone, O'Reilly Auto (no relation to Bill), Myriad Genetics and several others. Smart stock operators should be looking at Investors Business Daily every day and look at the highlighted charts showing positive price and volume characteristics as well as strong fundamentals.

If and when we do get into a new bull, I expect most to not believe in it as they are too busy counting their losses from the bear. This keeps them from getting in on the ground floor. One needs to realize that in order to take advantage of a new bull move, you have to forget your thinking prior to the better action. You cannot and must not keep bear market thoughts once the direction of the market changes. You must drown out any and all bearish noise as the market ignores bad news in new bull moves.

I remain at or near the high watermark from the previous bull market...a feat I consider as Larry David says: pretty pretty good. I am now thrilled to again see the market trying to make something of itself. As of this second, major averages are still down a whopping 50-55% during this bear market with some foreign markets down as much as 70%."If leadership shows up, I will be probing. If the market continues to show high volume up days and lower volume pullbacks, I will be adding. I do not need to predict. I do not need to tell you THE bottom is in. I do not need to give you targets for the end of the year. I just need to be in lockstep or just one step ahead in order to perform. I will let others reach for the glory of the grand call. Just keep in mind, most of these pundits have been making these grand calls all the way down. Lots of charlatans in this business.

One step at a time ladies and gentlemen. Let the market be your guide...and yes, markets can rally as news remains poor. Watch the market.

Disclaimer: The opinions expressed herein are those of the writer and may not reflect those of Wunderlich Securities, Inc. or any of its affiliates. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.

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